Seacoast Banking Corporation of Florida (NASDAQ:SBCF) Q4 2023 Earnings Call Transcript
Seacoast Banking Corporation of Florida (NASDAQ:SBCF) Q4 2023 Earnings Call Transcript January 26, 2024
Seacoast Banking Corporation of Florida isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Welcome to the Seacoast Banking Corporation's Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Audra, and I will be your operator. [Operator Instructions] After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Before we begin, I have been asked to direct your attention to the statement at the end of the company's press release regarding forward-looking statements. Seacoast will be discussing issues that constitute forward-looking statements within the meaning of the Securities and Exchange Act and its comments today are intended to be covered within the meaning of that act. Please note that this conference is being recorded. I will now turn the call over to Chuck Shaffer, Chairman and CEO of Seacoast Bank. Mr. Shaffer, you may begin.
Chuck Shaffer: Thank you, Audra, and thank you all for joining us this morning. As we provide our comments, we'll reference to the fourth quarter and full year 2023 earnings slide deck, which you can find at seacoastbanking.com. I'm joined today by Tracey Dexter, Chief Financial Officer; Michael Young, Treasurer and Director of Investor Relations; and James Stallings, Chief Credit Officer. Seacoast delivered another solid quarter of financial performance generally in line with last quarter's guidance. The decline in net interest income was offset by expense reductions, resulting in a pretax pre-provision return on tangible assets of 1.48% and an adjustable return on tangible common equity of nearly 12% and an efficiency ratio of 60%.
Seacoast ended the year -- Seacoast ended the year with an industry-leading Tier 1 capital ratio of 14.6%, making it one of the strongest banks in the nation. On previous calls, we've highlighted that this capital strength would likely provide opportunities for the bank. This quarter evidenced 2 clear benefits. First, we were able to opportunistically repurchase 546,000 shares of our common stock at a weighted average price of $19.80, representing an attractive earn-back on the deployed capital. Secondly, our tangible book value increased nearly 6% from the prior quarter as we've been able to maintain a large percentage of our securities in AFS compared to peers. Our substantial capital and fortress balance sheet will continue to offer strategic advantages and further optionality in the future.
And during the quarter, the effects of quantitative tiding and rising interest rates on the industry have become increasingly evident. Our core net interest margin declined 11 basis points, slightly exceeding our guide by 1 basis point. This was mainly driven by the ongoing transition of noninterest bearing accounts to interest-bearing products, which was consistent with previous quarters' trends. It's important to note that we're not seeing attrition of engaged customers and in fact, gross customer acquisition of checking accounts was up 13% from the same period one year ago. Notably, we believe the first-half of 2024 represents the low point for our net interest margin and net interest income. Tracey will offer additional guidance on this shortly.
We have implemented measures to optimize our efficiency across the organization. And in the third quarter, we reduced our workforce by 6%, which led to an 8% decrease in expenses in Q4 2023. Furthermore, the completion of a second phase of cost reductions in early Q1 2024 is projected to further decrease our annual operating expenses by an additional $15 million. And turning to our lending strategy, we are encouraged by the growth in our lending pipelines while maintaining a prudent approach in the current economic climate. Our loan portfolio grew by 2% annualized from the previous quarter, and we expect continued growth into 2024. Our loan add-on rate rose to near 8% during this period. And additionally, it's important to emphasize that we acquired a comprehensive banking relationship with Seacoast for all of our lending activities, ensuring a mutual beneficial partnership with our clients.
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